Sm7 Ch03 Positioning

Services Marketing
Chapter 3:
Positioning Services
in Competitive Markets
Slide © 2010 by Lovelock & Wirtz Services Marketing 7/e Chapter 3 – Page 1
Overview of Chapter 3
Services Marketing
 Focus Strategies for Services
 Market Segmentation
 Service Attributes and Levels
 Positioning Distinguishes a Brand from its Competitors
 Developing an Effective Positioning Strategy
 Using Positioning Maps to Analyze Competitive Strategy
 Changing Competitive Positioning
Services Marketing
Focused Strategies for

Services
Standing Apart from the
Competition
Services Marketing
“A business must set itself apart from its

competition. To be successful it must identify and
promote itself as the best provider of attributes that
are important to target customers.”
George S. Day
Basic Focus Strategies for Services
Services Marketing
Considerations for using Focused
Strategies
Services Marketing
Fully focused: Limited range of services to narrow and specific

market
 Opportunities  Risks
 Developing recognized  Market is too small to
expertise in a well-defined generate needed volume
niche may provide  Demand may be displaced
protection against would- by generic competition
be competitors from alternative products
 Allows firms to charge  Purchasers in chosen
premium prices segment may be
susceptible to economic
downturn
Considerations for using Focused
Strategies
Services Marketing
 Market focused
 Narrow market segment with wide range of services
 Need to make sure firms have operational capability to do and
deliver each of the different services selected
 Need to understand customer purchasing practices and
preferences
 Service focused
 Narrow range of services to fairly broad market
 As new segments are added, firm needs to develop knowledge and
skills in serving each segment
Considerations for Using
Focus Strategies
Services Marketing
 Unfocused
 Broad markets with wide
range of services
 Many service providers fall
into this category
 Danger – becoming a “jack
of all trades and master of
none”
Services Marketing
Market Segmentation
Market Segmentation
Services Marketing
 Firms vary widely in their abilities to serve different types of

customers
 A market segment is composed of a group of buyers

sharing common characteristics, needs, purchasing
behavior, and consumption patterns
 Target segments should be selected with reference to

 Firm’s ability to match or exceed competing offerings directed at
the same segment
 Not just profit potential
Services Marketing
Service Attributes and Levels
Developing Right Service Concept
for a Specific Segment
Services Marketing
 Use research to identify and prioritize which attributes of a given

service are important to specific market segments
 Individuals may set different priorities according to:

 Purpose of using the service
 Who makes decision
 Timing of use
 Whether service is used alone or with a group
 Composition of that group
Important vs. Determinant Attributes
Services Marketing
 Consumers usually choose between alternative service offerings

based on perceived differences between them
 Attributes that distinguish competing services from one another

are not necessarily the most important ones
 Determinant attributes determine buyers’ choices between

competing alternatives
 service characteristics that are important to purchasers
 customers see significant differences between competing alternatives on
these attributes
Establishing Service Levels
Services Marketing
 Make decisions on service levels – level of performance firm

plans to offer on each attribute
 Easily quantified attributes are easier to understand – e.g., vehicle speed,
physical dimensions
 Qualitative attributes subject to individual interpretation – e.g., physical
comfort, noise levels
 Can often segment customers according to willingness to trade

off price versus service level:
 Price-insensitive customers willing to pay relatively high price for high
levels of service
 Price-sensitive customers look for inexpensive service with relatively low
performance
Services Marketing
Positioning Distinguishes a
Brand from its Competitors
Four Principles of Positioning
Strategy
Services Marketing
 Must establish position for firm or product in minds of

customers
 Position should be distinctive, providing one simple,

consistent message
 Position must set firm/product apart from competitors
 A company cannot be all things to all people – must focus

its efforts
Principles of Positioning
Services Marketing
Avoid
Avoid trap
trap of
of investing
investing too
too
heavily in
heavily in points
points of
of
differences
differences that
that are
are easily
easily
copied!
copied!
What changes must we
make to strengthen our
competitive position?
How
How well
well do
do target
target customers
customers
What does our firm stand
perceive our service
perceive our service
for in the minds of current
products
products as
as meeting
meeting their
their
and potential customers?
needs?
needs?
How does each of our What customers do we

service products differ serve now, and which ones
from competitors’? would we like to target?

What is value proposition for
What is value proposition for
our current service products,
and market segments?
Services Marketing
Developing an Effective
Positioning Strategy
Developing an Effective Positioning
Strategy
Services Marketing
 Positioning links market analysis and competitive analysis

to internal corporate analysis
 Market Analysis
 Focus on overall level and trend of demand and geographic
locations of demand
 Look into size and potential of different market segments
 Understand customer needs and preferences and how they
perceive the competition
Developing an Effective Positioning
Strategy
Services Marketing
 Internal Corporate Analysis

 Identify organization’s resources, limitations, goals, and values
 Select limited number of target segments to serve
 Competitor Analysis
 Understand competitors’ strengths and weaknesses
 Anticipate responses to potential positioning strategies
Market, Internal, and Competitive
Analyses
Services Marketing
Anticipating Competitive Response
Services Marketing
 Competitors might pursue same market position

 Independently do same positioning analysis and arrive at similar
conclusions
 Threatened by new strategy, take steps to reposition own service
 New entrant plays “follow the leader”
 Conduct internal corporate analysis for challengers and analyze

possible effects of alternative moves
 Impact of price cut on demand, market share, and profits
 Responses of different segments to changes in service attributes
Services Marketing
Using Positioning Maps to

Analyze Competitive Strategy
Using Positioning Maps to Plot
Competitive Strategy
Services Marketing
 Great tool to visualize competitive positioning and map

developments of time
 Useful way to represent consumer perceptions of alternative

products graphically
 Typically confined to two attributes, but 3-D models can be used

to portray positions on three attributes simultaneously
 Information about a product can be obtained from market data,

derived from ratings by representative consumers, or both
Positioning of Hotels in Belleville:
Price vs. Service Level
Services Marketing
Expensive
Grand
Regency
PALACE
Shangri-La
High Moderate
Service Atlantic Service
Sheraton
Italia
Castle
Alexander IV
Airport Plaza
Less Expensive
Positioning of Hotels in Belleville:
Location vs. Physical Luxury Services Marketing

High Luxury
Regency
Grand
Shangri-La
Sheraton
PALACE
Financial Shopping District Inner

District and Convention Center Suburbs
Castle Italia
Alexander IV
Atlantic
Airport Plaza
Moderate Luxury
Positioning After New Construction:
Price vs. Service Level
Services Marketing
Expensive
Mandarin
New Grand Heritage
Marriott
Continental
Action?
Regency PALACE
Shangri-La
High No action? Moderate
Service Service
Atlantic
Sheraton
Italia
Castle
Alexander IV
Less Expensive Airport Plaza
Positioning After New Construction:
Location vs. Physical Luxury
Services Marketing
High Luxury
Mandarin
New Grand
Continental Heritage
Marriott Regency
Sheraton Shangri-La
Action?
PALACE
Financial No action? Shopping District Inner

District and Convention Center Suburbs
Castle Italia
Alexander IV
Atlantic
Airport Plaza
Moderate Luxury
Positioning Maps Help Managers to
Visualize Strategy
Services Marketing
 Research provides input to development of positioning

maps – challenge is to ensure that
 Attributes employed in maps are important to target segments
 Performance of individual firms on each attribute accurately
reflects perceptions of customers in target segments
 Predictions can be made of how positions may change in

light of future developments
 Charts and maps can facilitate “visual awakening” to

threats and opportunities, suggest alternative strategic
directions
Services Marketing
Changing Competitive
Positioning
Repositioning
Services Marketing
 Firm may have to make significant change in existing

position
 Revising service characteristics; redefining target market
segments; abandoning certain products; withdrawing from certain
market segments
 Improving negative brand perceptions may require

extensive redesign of core product
 Repositioning introduces new dimensions into positioning

equation that other firms cannot immediately match
Summary
Services Marketing
 Focus Strategies:
 Fully focused
 Service focused
 Market focused
 Unfocused
 Market Segmentation – buyers share common

characteristics, needs, purchasing behavior & consumption
patterns
 Service attributes – determinant attributes are often the

ones most important to customers
Summary
Services Marketing
 Positioning links:
 Market Analysis
 Internal Analysis
 Competitive Analysis
 Positioning maps are useful for plotting competitive

strategy:
 Identify potential competitive responses
 Help executives to visualize strategy

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Services Marketing

 Service Attributes and Levels

 Positioning Distinguishes a Brand from its Competitors

 Developing an Effective Positioning Strategy

 Using Positioning Maps to Analyze Competitive Strategy

 Changing Competitive Positioning

Focused Strategies for

“A business must set itself apart from its

Fully focused: Limited range of services to narrow and specific

 Firms vary widely in their abilities to serve different types of

 A market segment is composed of a group of buyers

 Target segments should be selected with reference to

Service Attributes and Levels

 Use research to identify and prioritize which attributes of a given

 Individuals may set different priorities according to:

 Consumers usually choose between alternative service offerings

 Attributes that distinguish competing services from one another

 Determinant attributes determine buyers’ choices between

 Make decisions on service levels – level of performance firm

 Can often segment customers according to willingness to trade

 Must establish position for firm or product in minds of

 Position should be distinctive, providing one simple,

 Position must set firm/product apart from competitors

 A company cannot be all things to all people – must focus

How does each of our What customers do we

from competitors’? would we like to target?

 Positioning links market analysis and competitive analysis

 Internal Corporate Analysis

 Competitors might pursue same market position

 Conduct internal corporate analysis for challengers and analyze

Using Positioning Maps to

 Great tool to visualize competitive positioning and map

 Useful way to represent consumer perceptions of alternative

 Typically confined to two attributes, but 3-D models can be used

 Information about a product can be obtained from market data,

Location vs. Physical Luxury Services Marketing

Financial Shopping District Inner

Financial No action? Shopping District Inner

 Research provides input to development of positioning

 Predictions can be made of how positions may change in

 Charts and maps can facilitate “visual awakening” to

 Firm may have to make significant change in existing

 Improving negative brand perceptions may require

 Repositioning introduces new dimensions into positioning

 Market Segmentation – buyers share common

 Service attributes – determinant attributes are often the

 Positioning maps are useful for plotting competitive

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